Alabama County Files for Bankruptcy

http://politicalwire.com/archives/2011/11/09/alabama_county_files_for_bankruptcy.html

Jefferson County, Alabama, filed the largest U.S. municipal bankruptcy after an agreement among elected officials and investors to refinance $3.1 billion in sewer bonds fell apart, Bloomberg reports.

Matt Taibbi, from earlier this year: "The genesis of the whole affair was a sewer project that crooked local pols turned into a $3 billion money pit; when they turned to Wall Street to help finance their way out of the cost overruns, the banks leaned on the County to take on a series of swap deals that essentially pushed the debt into the future, but at geometrically increasing cost. Among other things, the banks worked through middlemen who bribed the local commissioners into taking the toxic deals. As a result of all of this, Jefferson County not only ended up saddled with an astronomical debt service on its sewer project, it also saw a downgrade in its overall credit rating, which left it paralyzed in its attempts to borrow money to pay for general expenditures."

The Birmingham News notes that since 1981, 35 cities, towns, villages and counties nationwide have filed for Chapter 9 bankruptcy, including five in Alabama.


..